This is also about the press and the media. The example that we cited over and over in our report was the baby P case in Haringey. I do not want to get into the details of that but, in essence, as soon as it happened, horrific though the case was, it was being discussed in Parliament, the Opposition were requiring Ministers to respond and Ministers felt that they had to respond. However, in reality, the case involved a failure at the local level on the part of the council, and the police and the local health service-they are the ones who should be held to account. The local councillors and the local council officials are the ones who should have been put on the spot by the media and by the people in the borough concerned; they should not have gone to central Government level to take people to task. Our colleagues in Sweden and Denmark said that that would not have happened in their countries; if there was a 10 Dec 2009 : Column 575
comparable case in those countries, the national press would not demand that the Secretary of State stand up to comment.

Mr. Robert Syms (Poole) (Con):
The hon. Lady makes a powerful point. As a result of that case, the Badman review is taking place. It is trying to get local authorities to implement new inspection regimes on home education-that issue has been a feature of petitions in this House. Such a regime will add costs; indeed there will be a tougher regime on home educators than in respect of those on the at-risk register. We seem, again, to be going full circle, rather than allowing local authorities to sort out their own problems.

Dr. Starkey:
I am not going to comment on the detail of that, because I suspect that I take a rather different view from the hon. Gentleman on that review, the proposals and the objections. However, this is an example of where a decision is being taken centrally, although it is a matter of debate among members of the public as to whether that is the appropriate place for such a decision to be taken. On child protection, the public have proved themselves to be resistant to leaving local councils to get on with it and appear to have much more confidence in central Government.

In parenthesis, in another inquiry that the Committee has completed on the Supporting People programme, it was very interesting that many of the people who gave us evidence on services for people with drug addictions, the vulnerable homeless and victims of domestic violence-groups who might be perceived to have a pretty low profile with the local electorate-were very twitchy about removing central controls. They were not confident that local councils would respond to the demands. I am not saying that they are right to be so, but that simply is a fact. The people supporting those groups had more confidence in central Government than they did in local government.

I simply want to make the point that was made to us very forcefully by Dr. Vernon Bogdanor, who is of course a constitutional expert. We asked him whether we needed a constitutional change and he said that we need a cultural change. This is not just a question of changing the rules-it is much more wide ranging than changing the rules and regulations, and who decides them. We need a huge cultural change, which it is probably a bit beyond Parliament to create. Obviously, we should do what we can.

That is the opening point that I wanted to make about the background. On the central and local relationship, it is also interesting that although the Government, in their evidence, could point out a number of steps that they had taken that appeared to reduce the level of control over local government and to start nudging it slightly towards greater localisation, the Government's assessment of how far they had gone down the road towards lightening up was a bit further down the road than the progress perceived by most councils.

The Committee effectively recommended that councils must be given much greater flexibility in the breadth and standard of services that they deliver and much greater power to vary that as well as a much greater ability to raise a bigger proportion of their income, and not to be so reliant on the Government. Let me touch on those aspects of the report, but before I do so, I want to make what might be considered a philosophical 10 Dec 2009 : Column 576
point. We were in favour of more devolution not simply because locally determined services were likely to be more responsive to local need and therefore more effective and, probably, more cost-efficient, but because we felt that it would strengthen local democracy to have much more decided locally. That itself would strengthen the democratic fabric of the country. Democracy is seamless and if people had a clear understanding of, and greater involvement in, local democracy, they would be more likely to feel that they had more of a commitment to, and involvement in, the democratic process at a national level and a regional level, if appropriate, too.

The second point about allowing councils to raise a bigger proportion of their income is that we cannot get local accountability unless we have much greater local control of income and spending. Otherwise, there is no obvious link for local voters between what they are paying in council tax and the quality and breadth of the services that they receive. At the moment, some 75 to 80 per cent. of the councils' income comes, in one way or another, from central Government grants. The relationship between the level of council tax and the quality and breadth of services is therefore pretty minimal.

Mr. Andrew Pelling (Croydon, Central) (Ind):
May I proffer another example? Although the devolution to London was extremely welcome, we ended up in a situation where the council tax made up only one twelfth of the revenue of the mayoralty and the Greater London authority. The current Mayor has ended up reverting to the fare-box to secure a significant hold on the finances. Perhaps if the business rates-or some element of them-had been given to the Mayor, that would have shown an even greater endorsement of the Government's ambition to devolve and to have that direct relationship between the voter and the Mayor in the control of the finances.

Dr. Starkey:
The hon. Gentleman anticipates one of the specific proposals-albeit not in relation to the London Mayor-that the Committee made when we got down to the detail of our recommendations on local government income. He makes the point that under the existing system, especially when there are several layers of local government, it is extremely difficult for voters to understand exactly what they are paying for and the relationship between local tax-whatever it is-and the quality of services. In my view, the clearest form of accountability comes when someone is able to see a relationship between what they vote for, in relation to paying, and the services that they get.

On giving greater autonomy to local government, we certainly felt that central Government should reduce the number of performance indicators and specifications that they make on the detailed way in which services should be provided. We felt that the subsidiarity principle should be adhered to properly, and that local government should be given a power of general competence, if it was demonstrated that the existing well-being powers were falling short. At the time when we concluded the report, the court case on a mutual company had not concluded, and we would now say that there should definitely be a power of general competence because it is clear that the well-being powers did not deliver quite what they were supposed to.

The Committee felt that there should certainly be statutory rights for local communities to determine the way in which public services are implemented and 10 Dec 2009 : Column 577
co-ordinated in their areas. We thought that the power of councils to vary service standards should be limited, in that there should still be reasonable national minimum standards below which councils should not have the freedom to reduce services. This is a difficult issue, but we got the sense that the British public were not quite ready for councils to have complete freedom to reduce such things as the level of education provided or standards of street cleanliness. While there should be national minimum standards, however, councils should have the freedom to vary above them. Obviously, that suggests that the standards should not be so prescriptive that no reasonable council would want to vary from them one way or another. We certainly feel that councils should have oversight over the full range of public services in their area and the way in which they integrate with each other, as I shall point out when I set out our suggestions on policing and health care.

The Government's response shows that they at least partially recognise what we are saying and that they are moving in the right direction. However, I think that we would conclude that they are still not moving far enough and that they need to lighten up considerably more.

Health care and policing, especially neighbourhood policing and public health, are incredibly important local services, and there is already a degree of co-operation between local councils and those services through crime and safety partnerships. Several local authorities have pooled budgets, particularly with the NHS, and some make joint appointments. For example, my council's director of public health is a joint appointment, so there is already some joint working. However, the Committee feels that a local authority, as the only elected local body, should have much more direct control over other public services.

Specifically on health care, we suggest that where there is a coterminous primary care trust and unitary authority, the Government should consider introducing a pilot scheme that effectively gets rid of the PCT board and replaces it with the council. We recognise that that process would be relatively simple in such areas, whereas it would be difficult to introduce throughout the whole country because the boundaries of PCTs and councils are not coterminous in many places and a huge reorganisation would be necessary. However, it would be worth trying that out in some areas. We also suggest that, in the absence of such a development, the Department of Health and the Home Office should at least work much more closely with the Department for Communities and Local Government to establish local authority commissioning models for both health care and local policing.

When members of the Local Government Association representing the three main parties were asked in our evidence session about democratic control over police services, it was extremely impressive that they spoke with absolutely one voice. I understand that the one voice with which they spoke differed from each of the parties' Front-Bench policies. Essentially, that one voice said that we should certainly have local, democratic control over the police, that there is already a local, democratic body-the council-and that it should have such control. The members of the LGA were root-and-branch opposed to directly elected 10 Dec 2009 : Column 578
police chiefs and police committees. We were extremely impressed by that, and I think that we largely agreed with them.

Ministers in the Department for Communities and Local Government have at least some understanding of local government and some feeling for devolution to local government, but we were unimpressed by the Ministers from the Department of Health and the Home Office, who did not seem to have much understanding of how local government worked or how it impinged on their Departments. I suspect that we would have gained a similar impression had we asked for a Minister from the Department for Children, Schools and Families or any other Department.

That points to a problem: even if DCLG is signed up to devolution, it has a big job to do to persuade the Ministers and civil servants in other Departments whose responsibilities impinge on local government to take the same relaxed view; to recognise the virtues of devolving power to local councils; and to realise that devolution might lead to departmental policy delivery locally that was more effective and cost-effective than it would be if they continued to try to micro-manage it.

On local government finance, we expressed the view that the Government must consider a variety of options to increase local government's revenue-raising powers. The issue is particularly relevant, given the country's likely economic climate and the need, as we come out of the recession, to rein in public spending. Local councils should be given greater flexibility in terms of revenue-raising powers, because future extreme funding shortages, as constrained by central Government, will mean that, even if councils are given increased powers to take decisions, they will not have any effective ability to vary services; they will simply be given flexibility in terms of what to cut. Indeed, local councillors will once again be held responsible for cuts that they have no power to vary. It is therefore particularly important that we increase local government's revenue-raising powers.

On local government taxation, the Committee concluded that there should be a supplementary local income tax alongside a property tax, and a corresponding reduction in central income tax rates so that the overall tax burden remained the same. Obviously, that could not be introduced tomorrow, but it is a potential long-term solution to the balance-of-funding problem, and one that the Government should seriously consider. Unsurprisingly, they immediately responded by saying that they had no plans to undertake such a project. I shall leave it to the Minister to explain why.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab):
Or change her mind.

Dr. Starkey:
Indeed.

Mr. Pelling:
Some of the Committee's proposals are very similar to those of the Layfield report. Does the hon. Lady think that the Callaghan Government's abandonment of that report was where we all went wrong?

Dr. Starkey:
It is difficult to blame one set of people at one point. The fact is that, over the decades, a variety of people have, if I may describe it this way, bottled out. On the other hand, this country's experience of changing 10 Dec 2009 : Column 579
local government taxation systems has been an unhappy one, and I can absolutely see why central Government of whatever party, having been rather burnt by the poll tax experience, take the view that minimal and incremental change is the best way forward.

Personally I think that incremental change on council tax reform, for example, could go a lot further than it has; all Governments seem to be extremely timid about the matter. To be fair, I understand that. We all know that when a system is changed, there are winners and losers. The winners take what they have got, keep quiet and carry on and the losers make a lot of fuss. It is extremely difficult. Sooner or later, however, somebody will have to bite the bullet because we cannot carry on nibbling away at the system and changing it incrementally.

We certainly reiterated the view that the Committee had taken before, which was that the business rate should be relocalised. Speaking personally again, I should say that I was on the other side of the argument in the sense that I was in local government when the business rate was taken away. It was alleged that some councils were bleeding businesses dry because the businesses had no vote. However, I recall that there was never any concrete evidence that that was happening on a grand scale. It seemed to me at the time a pretty poor evidential basis for reducing-removing, essentially-any accountability between a local council and its local businesses.

The fact that business rates are not localised means that whether there are active and successful businesses in an area makes no difference to the income of the local council, which will get exactly the same amount of redistributed business rate back. The relocalisation of the business rate is an extremely important issue.

Mr. Betts:
On the issue of the business rate and how councils might misuse it if they got it back, I am sure that my hon. Friend recalls from her days in local government that when domestic and business rates were levied, there was a link between the two; councils could not increase the business rate and hold the domestic rate down. There was always that local accountability and democratic control over overall increases in rates.

Dr. Starkey:
Absolutely. Of course, the Government have introduced the supplementary business rate, although that is largely for Crossrail. Schemes have been introduced that allow for business income to be raised locally against specific local projects. That has re-established a relationship between local businesses and local councils and demonstrated how local businesses benefit from local spending. Their acquiescence in contributing towards that spending is also encouraged when they know what it is for.

Unsurprisingly, the Committee reiterated its opposition to capping. When there is capping, democratic accountability between a local electorate and their local council is essentially removed and central Government try to second-guess the decisions of local councils. If local councils believe that they are delivering such a good and improved service to their local electorate that their local electorate will be willing to pay higher tax, the Committee and I felt that that is for them; if the local electorate did not agree, they would know what to do. We reiterated our view that capping should go completely.

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We also considered forms of grant allocation and recommended some improvements. We were very constrained about what we could suggest in relation to Government grants. During our visit to Denmark and Sweden, it became apparent to us that the level of equalisation required between different authorities in those countries is small compared with what would be required in this country. The income difference between the poorest and richest councils in those countries is much less than the gap in this country because they are much more equal societies-partly as a result of their histories, but also because of their political systems.

When we look at the difference between our poorest and richest councils and the amount of money that needs to be reallocated through the equalisation process, it becomes difficult to think of ways in which one could reduce the contribution that central Government grant makes to local government income. We therefore contented ourselves with making several recommendations about transparency. We said that the advice and evidence that was given to the Department to inform changes in the grant formula should be made available on the DCLG website so that people could see how the formula was arrived at, the factors that had gone into it, and the advice that had been given; that the Government should do everything they could to increase the transparency of the grant allocation process; and that the maximum amount of detailed material should be published on the website. That would at least go some way towards enabling people to have a more informed debate about the outcome of the grant process instead of their being reduced to complaining, as we all have, about our own areas being funded less adequately than others without relating that to different needs.

We made some recommendations about constitutional change. We felt that it was important to enshrine the position of local government and the commitment to subsidiarity in a constitutional framework so that future Governments could not swing things back towards centralisation. We suggested that the European charter of local self-government, to which we signed up some years ago, should be put on to a statutory basis. We also said that there should be a Joint Committee of the House of Commons and the House of Lords to scrutinise and monitor legislation to ensure that none went through this House or the other House that took power away from local government, but preferably did that the other way round. Essentially, it would be like the connection between the Human Rights Act 1998 and the Joint Committee on Human Rights, but in the sense of protecting local government from further central Government encroachment.

Dan Rogerson (North Cornwall) (LD):
I congratulate the hon. Lady and her Committee on their report. In their discussions on having a Joint Committee, was any consideration given to the constitutional implications of having representatives from local government serving on such a body alongside peers and Members of the House of Commons?

Dr. Starkey:
We may have discussed that, but I do not recall doing so. We were thinking that it would be analogous to the Human Rights Committee, in which case it would be much more appropriate to have Members of both Houses.

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I am getting the message that I should finish and allow other Members to contribute. The spirit of our report was that we wanted to get debate going; we have certainly done our best to do that within the House, but also more widely. I am grateful to all those in local government, among others, who have taken up the report and used it as a discussion document to get the debate going outside this House as well as within it. I hope that we are going to see real change.